2020 has been the year of change and challenge for business owners. What you might have intended for the year could have been turned upside down, and even your existing succession or business transfer plan might need an update.
There is a lot of uncertainty in the world today which means that business owners have to take stock of everything on their plates and determine their most important opportunities to recalibrate and protect their companies. There is a significant catalyst onboard for transitioning ownership of your company due to lower gift and estate tax exemptions currently applied and depressed business valuations. If you currently have an operating business, you should analyze the effectiveness of making gifts throughout 2020.
Current laws enable individuals to transfer $11.58 million of their assets during their lifetime without triggering the federal gift and estate taxes. Right now the current maximum GST tax rate is 40% and even though that is not set to be retired and brought down until 2025, there could be significant legislation on the table as a result of the election.
Even if the exception amount decreases, the IRS has already confirmed that taxpayers who make transfers this year will be able to do so with relative confidence. For more information about this process and how to plan ahead for your business, schedule a consultation with a succession lawyer in Pasadena.